Portland Digital eXperience: Spotify, Shazam, and the toppling of traditional music consumption

Given its scheduling along side MusicfestNW, one of Portland Digital eXperience’s most anticipated keynotes was the Dave Allen-moderated discussion on the science of music discovery with Shazam and Spotify. And given that nature of the very indie-friendly music festival and Portland’s inarguably hipster, screw-the-man spirit, you can assume the discussion erred toward the tense side.

As a bit of background, Allen is a musician, formerly worked as director of Consumer Digital Audio Services for Intel, and now runs independent record label Pampelmoose [update: Allen is director of interactive strategy at North, Inc, a Portland-based branding firm]. So suffice it to say he takes some issue with how the current state of mainstream music discovery and consumption is working.

Right after panel introductions – which consisted of Allen, Peter Szabo from Shazam and Jason LaCarruba from Spotify, the tough questions started — mostly targeted at Spotify.

First up, Allen had to ask Spotify where those 50 million users it told the Wall Street Journal it planned to get way back during its stateside launch. “I think we’re doing really well getting those users. We’re always trying to launch new features to do that,” LaCarruba said, mentioning the relatively new Radio feature, which he works on (and says will be getting better).

That said, he admitted that Spotify definitely has not hit the 50M mark; it has 15 million globally, four million of which are paying customers. Which prompted this comment from Allen: “Your valued at $4 billion. How can that be?”

Shazam, which wasn’t hit quite as hard with the “how dare you!”s, had some impressive numbers to report. The app currently has 225 million people worldwide, 70 million of which are in the U.S. — and it’s adding two million a week. “It’s one of those apps when people first get a smartphone, they download,” Szabo reasoned.

Of course, Shazam has been around longer than Spotify and is a more diverse service.

Piracy and artists’ rights couldn’t go untouched, either. For all their inherent problems, one thing the streaming services — and arguably products like Shazam — bring to the table is that they fight illegal downloading. Both Szabo and LaCarruba generalized a bit here, but reasoned that by cutting down on piracy so largely, it’s paving the way for a better future for artists’ pockets.

As you can assume, Allen had a lot to say about this. Of course, he’s not the only one: Since Spotify’s launch, indie labels and artists — and even The Black Keys — have called out Spotify for hurting musician’s bottom lines. “My last check was $17. Thats not funny,” Allen told the crowd. “I make no money from streaming.”

The defense? Basically, that at least it’s progress against piracy, and that the more people who decide to pay for streaming services like Spotify, the more money will come in. That there’s fun and experimentation in this new music technology and that it’s going to find a sweet spot at some point. And to Shazam’s credit, nine percent of mobile listens lead to a purchase — so there is a proven correlation between discovery and buying there.

Allen’s response? Not good enough.

For starters, he reiterated that streaming platforms can’t honestly think of themselves as a viable way for musicians to make money — and the conversation quickly took a turn into the current generation of music discovery and curation disrupting the old. There were plenty of references about how people used to buy albums and not just singles, about vinyl, about the lost human influence of the DJ — it became fairly clear that instead of a discussion about the science of finding and listening to music, we were watching a tug-of-war between the old and the new.

Don’t get me wrong, there are plenty of problems with our current state of content consumption, but I feel more comfortable placing that blame on the labels and rights holders versus outlets connecting users to music. And it’s because they don’t want to change, they want things to continue as they have been — and that’s something consumers simply won’t settle for anymore.

“My friend doesn’t have to make a mixtape and bring it to me to introduce me to new music — it’s so much more immediate,” says Szabo; to which Allen replied: “I liked the old way.”

Complaining about this “inhuman” experience is warranted, sure, but then you’re tackling a much bigger beast, and that’s the digitalization of nearly all our interactions. It’s not just music — it’s talking to people, buying food, the work office; all of these things have been transitioned thanks to technology.

Jury’s still out on how well the new music models will find compromise for users, artists, and labels; it’s a lot to attempt. And there are no shortage of imperfections along the way — but there’s simply no going backward from here.